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1. You have a one year zero coupon bond that pays $100. The price today is $90.90. What is the spot rate for 1 year

1. You have a one year zero coupon bond that pays $100. The price today is $90.90. What is the spot rate for 1 year (r1)?

2. You have a two year coupon bond with a 10% coupon rate. The principal is $100. The spot rate for 2 years is 15%. What is the price of this bond today?

3. Compute the modified duration for the two bonds and answer what would be the price of the two bonds if the YTM increases in every case by 1%. The Yield to maturity for the coupon bond is 14.74%.

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